China’s technology‑focused STAR Market closed the snake year as the clearest winner in an otherwise broad A‑share rally, with a surge in index performance matched by a rapid expansion of ETF products and record fundraising. The STAR Market’s ecosystem — increasingly shaped by post‑listing reforms and a richer suite of index‑linked instruments — has turned into a preferred conduit for both speculative flows and nascent long‑term institutional allocations.
Across the 12 months from the 2025 Lunar New Year to the eve of the 2026 Spring Festival, benchmark mainland indices posted robust gains: the Shanghai Composite rose 27.18%, the Shenzhen Component 40.64% and the ChiNext roughly 61.26% as of 12 February. Within that broader advance, STAR Market wide‑base indices outpaced peers: the SciTech 50, SciTech Composite, SciTech 100 and SciTech 200 climbed about 55.06%, 64.83%, 72.85% and 83.00% respectively, underscoring heavy investor interest in listed Chinese technology companies.
That outperformance rests on deliberate policy and market design. Regulators have broadened eligibility and introduced new listing pathways: to date the STAR Market lists roughly 604 companies with a combined market capitalisation near CNY 11.35 trillion and an average price‑to‑earnings ratio of 75.05. Reforms branded as “1+6” and earlier “eight measures” have accelerated deal activity — more than 170 acquisition deals since the measures, roughly CNY 90 billion in announced transaction value, and a near 70% completion rate — while encouraging listings from unprofitable firms, special share structures and red‑chip issuers.
Product innovation has multiplied investor access. The Shanghai Exchange and China Securities Index Company now maintain a 32‑index SciTech suite spanning broad, sectoral and strategy indices, 17 of which have been packaged into investable funds. Asset managers have issued more than 100 ETF‑linked products tied to STAR Market indices and cumulative assets approach CNY 300 billion. In 2025 alone, 65 new SciTech ETFs were launched and raised CNY 44.749 billion — a single‑year issuance and fundraising record.
Institutional interest has begun to follow. By mid‑2025 insurers, enterprise annuities and similar long‑horizon investors had allocated over CNY 40 billion to SciTech ETFs, with particularly strong demand for SciTech 50 products. The SciTech Composite Index, launched in January 2025 and covering roughly 96% of STAR Market listings, has already produced a full product chain — ETFs, feeder funds and enhanced strategies — with 81 funds from 49 managers and around CNY 25.8 billion in assets under management. Proponents argue that broader index coverage reduces single‑stock risk and could support a virtuous loop of liquidity, price discovery and capital for innovative firms if pension funds eventually gain exposure.
The opportunity is clear but so are the dangers. Concentration in next‑generation information technology and life sciences lifts the STAR Market’s growth potential but also skews risk: average valuation multiples are high and the SciTech Composite’s historical maximum drawdown since end‑2019 was nearly 57.9%. Much of the market’s momentum remains policy‑sensitive; sustained inflows from pensions or mandated institutional allocations would stabilise the market, but an abrupt withdrawal of sentiment would likely amplify volatility. For global investors, the STAR Market offers exposure to China’s strategic technology push, but with the trade‑off of elevated valuation and execution risk.